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May 18, 2013

Investors Call on Corporations to Ensure Worker Safety in Bangladesh
    by Robert Kropp

Two coalitions of investors pressure clothing retailers to join the Accord on Fire and Building Safety in Bangladesh, whose 40 signatories include only two companies headquartered in the US. -- In April, the collapse of a garment factory in Bangladesh caused the deaths of more than 1,100 workers. Months earlier, a fire at the Tazreen garment factory killed more than 100 workers and stood as the worst loss of life for the industry in Bangladesh, until the building collapse in Rana Plaza.

Survivors of the Tazreen factory fire reported that exit doors were locked and bystanders reported that workers were forced to jump from the windows of an eight-story building to escape. News reports compiled by RepRisk linked Tazreen with such major corporations as Wal-Mart, Disney, Sears, Enyce, Teddy Smith, and Edinburgh Woollen Mill.

Then, in May, another fire killed another eight workers.

Only China exports more clothing that Bangladesh, and most of the major clothing retailers in developed nations source clothing they sell from factories in Bangladesh. The recent tragedies have convinced many of them to commit to the Accord on Fire and Building Safety in Bangladesh, which "commits the signatories to finance and implement a program" of safety inspections, transparency and reporting, and remediation.

Some 40 companies have become signatories to the Accord. However, only two based in the US—Abercrombie and Fitch and PVH, the parent company of Tommy Hilfiger and Calvin Klein—have joined. Another 14 North American companies have declined to commit to the Accord. In a press release, Wal-mart made no mention of the Accord but stated that it would independently conduct safety reviews of the 289 factories in Bangladesh that produce clothing for the world's largest retailer.

Two coalitions of sustainable investment organizations have emerged to challenge corporations on their responsibility to address worker safety issues in their supply chains. Led by the Interfaith Center on Corporate Responsibility (ICCR), 170 investors representing more than $1 trillion in assets under management called for the implementation of "systemic reforms that will ensure worker safety and welfare, and to adopt zero tolerance policies on global supply chain abuses."

The coalition urges companies to sign the Accord, commit to ensuring living wages for all workers, publicly disclose their suppliers located in Bangladesh, and ensure that grievance mechanisms and effective remedies are in place.

Perhaps referring to Wal-mart's decision not to sign the Accord, the investors stated, "Acting alone, companies can and do bring about meaningful and positive changes in human rights in the countries where they source and manufacture…But when faced with intransigence of the type we have historically seen in Bangladesh on worker safety issues, we are convinced that systemic change will only occur when companies take action together."

A second coalition of investors, consisting primarily of pension funds and representing $1.35 trillion in assets, sent a letter to the companies, stating that the recent tragedies "poignantly illustrate the significant reputational, operational, and legal risks that are ubiquitous in global supply chains and underscore the urgent need for companies to know their suppliers, ensure compliance with safety standards, and fully disclose their supply chains."

"Companies must also actively ensure compliance," the letter continued. "It is not sufficient to place the onus for compliance on suppliers alone while pricing systems actively undercut requisite investment in infrastructure or encourage covert subcontracting."

"As investors, it is not in our interests for there to be any more tragedies."

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